philanthropy charitable solicitation registration requirements
TRANSCRIPT
LeadingAge Philanthropy Network
Complying with State Charitable Solicitation rules
September 11, 2013
Presented By: Tracy L. Boak
Perlman Perlman & Perlman, LLP
41 Madison Avenue, Suite 4000
New York, NY 10010
Ph: 212-889-0575
Fx: 212-748-8120
www.PerlmanandPerlman.com
WHAT ACTIVITY IS REGULATED?
SOLICITATIONIn short, solicitation is the affirmative act of asking for a gift or selling goods or services that will benefit a charitable organization.
44 states plus DC have some sort of statutory scheme to regulate charitable solicitations
REGISTRATION/REPORTINGRegistration and reporting requirements are imposed on charities, professional fundraising counsel, professional solicitors, and commercial co-venturers.
CHARITABLE ORGANIZATIONS
Primarily Section 501(c)(3) and (c)(4) organizations Also may include other nonprofit organizations as
defined by state law tax exemption and deductibility is a function of federal tax
law while the nonprofit status is a creature of state law
May even include for profit organizations key issue is asking for money using a charitable appeal
40 States plus DC require registration prior to commencement of solicitations
PROFESSIONAL SOLICITORS(a/k/a Professional Fundraisers or Commercial
Fundraisers)
Directly solicit the general public on behalf of a charitable organization for a fee
May have custody/control of the contributions received
Many states also require a pre-solicitation disclosure of professional status prior to making the request for a gift
Required to register in 44 states, post a surety bond, file contracts with their nonprofit clients and file campaign financial reports
PROFESSIONAL FUNDRAISING COUNSELS
(a/k/a Fundraising Consultants) Help plan, manage, advise on, consult or produce
and design solicitations to the general public for a fee
Do not make the solicitations
Generally, may not have custody or control of contributions
Required to register and file contracts in 32 states, and post bonds and file campaign reports in a few
COMMERCIAL CO-VENTURERS
An entity that, as part of a sales promotion, uses the charity’s name to sell its products or services (at its usual retail price) and makes a charitable donation based on the sales
Registration and/or filing of contract required in: Alabama, Hawaii, Maine, Massachusetts, Mississippi and South Carolina (+ maybe California)
17 other states regulate the activity but do not require registration
Require written contract and, in some cases, charity to file copy Require specific disclosure of the amount of the donation to potential
buyers (either as a dollar amount of percentage of sales)
STATE REQUIREMENTS
Annual Filings: State-specific Registration Forms IRS Form 990s Financial Statements (may need to be compiled, reviewed or
audited) Contracts Campaign Financial Reports (by professionals) Bonds (by professionals) Fees
Public Filings Record Retention Requirements
REGISTRATION EXEMPTIONS
Vary from state to state, but most common include: Churches and in most states - Religious Organizations Organizations raising less than a specified dollar amount
(most common is $25,000) Educational Institutions Organizations for which solicitations limited to
membership Volunteers soliciting for the benefit of a named individual Political organizations Hospitals
SOLICITATION DISCLOSURES
Several states require specific disclosures by charities and professional solicitors Sometimes, regardless of whether registration is required Others, only if registered
Many states require professional solicitors to identify themselves as such in any oral solicitations
Written solicitations: Verbatim disclosure requirements Typically, identification of where financial information about the
charity can be found
SOLICITING AND THE INTERNET
Charleston Principles
An effort by the National Association of State Charity Officials to provide guidance to both charities and state regulators regarding the application of state registration requirements to charities soliciting donations over the Internet.
Must register in the state of principle place of business.
Must also register in other states where specifically targeting residents (such as through letters or phone calls) or receiving repeated or substantial contributions from residents of those states.